This application relates generally to medical spending accounts. More specifically, this application relates to the substantiation of healthcare expenses applied to medical spending accounts.
There are currently a variety of different types of medical spending accounts. These different accounts are managed in different ways and are generally used for different purposes, but have as a common factor that they permit funds earned through employment to be applied with certain income-tax advantages to pay for certain healthcare expenses. As used herein, “healthcare” expenses include a broad array of expenses that may arise in course of diagnosing, preventing, curing, or treating any disease that affects any part of function of the human body. They may include expenses related to teeth or other oral structures in the form of dental expenses, and may include expenses related to the eye and other ophthalmic structures in the form of vision expenses. Healthcare expenses may include service fees paid to physicians, dentists, optometrists, nurses, or other medical practitioners, service fees paid to laboratories that perform analyses of blood or other tissues, or that operate diagnostic equipment like x-ray machines, magnetic-resonance-imaging machines, and the like. Healthcare expenses may also include costs incurred to purchase, rent, or lease a variety of products used for healthcare. Some examples include hearing aids, crutches, prescription (and sometimes nonprescription) drugs, artificial limbs and other prosthetic devices, orthodontic braces and other appliances, service dogs, oxygen supplies, and so on. These examples are merely illustrative since there are many other examples of healthcare expenses.
Different types of medical spending accounts available for these types of expenses in the United States currently include flexible spending accounts (“FSAs”), health reimbursement accounts (“HRAs”), and health savings accounts (“HSAs”), and other types of medical spending accounts may be developed in the future. FSAs are financial accounts that are established as part of employer-sponsored benefits plans. Employees are able to contribute a set annual amount to the accounts, usually as part of a regular salary deduction that is applied to each paycheck. The employee is then able to spend the funds from the accounts to pay for healthcare expenses. Often the annual amount can be spent before the employee has completed making the contributions, permitting payment for healthcare expenses effectively to be made on an interest-free credit basis. Because contributions to the accounts are made as a salary reduction, they are also no subject to income tax.
HSAs are financial accounts that are intended to provide for payment of unreimbursed medical expenses incurred by those who are self-employed or employed by small organizations (fewer than 50 employees). One qualification requirement for such accounts is that the employee be covered by a high-deductible insurance plan. Funds in the account can be used on a pre-income-tax basis to pay for certain medical-insurance premiums and can earn tax-deferred interest. Unlike with FSAs, the funds in HSAs are available to be rolled over from year to year if they are unused.
HRAs are financial accounts having funds that are set aside by employers to provide reimbursement for employees who incur medical expenses. Like HSAs, the funds in the account can be rolled over from year to year, but they differ from HSAs not only in the fact that it is the employer who funds them rather than the employee, but also in that they have no restrictions on the size of the company where they are offered. The tax advantage for such accounts is enjoyed by the employers, who qualify for preferential tax treatment in a manner similar to employers who fund insurance plans.
When any of these medical spending accounts is used to support a healthcare expense, there may be requirements imposed to validate the expense. Such validation is referred to in the art as “substantiation” and is conventionally performed by a third-party administrator (“TPA”). To perform such conventional substantiation, the TPA reviews documentation that identifies the nature and amount of the expense. Such documentation usually specifies the provider of the service or goods and the specific nature of the service or goods. This permits an adjudication to be made whether the service or goods are eligible expenses as defined by the terms of the appropriate medical spending account.
Such a substantiation process is both time-consuming and generates a considerable amount of paperwork to be processed. There is accordingly a general need in the art for improved methods and systems for substantiation of healthcare expenses.